FTSE finishes down 43 at 7,293
US shares take pounding on Trump healthcare stumble
Antofagasta biggest loser
Britain's blue chips closed lower as the trading week began as the Dow Jones sank across the Pond and miners took the brunt of selling.
The FTSE 100 closed down 43 points at 7,293 and comes as investors await the triggering of Article 50 later this week.
Prime Minister Theresa May is due to invoke the latter on Wednesday to begin the process of the UK withdrawing from the EU.
In the US, the markets are falling due to fears over the rest of President Trump's agenda after the failure to pass the new healthcare bill.
The question posed by Kathleen Brooks at London spreadbetter City Index is now...whether the economy will follow the stock market lower, or will solid growth help stocks to recover?
"We think that it should be the latter," she said. "Now that Trump has failed in his quest to overturn Obamacare, he is expected to turn his sights to tax reform. He may have more success in Capitol Hill with tax policy, which matters for the corporate bottom line. So, the Trump trade may be suffering a set-back, and we could see a resumption of the stock market rally in the short-term."
On Footsie, the biggest loser was copper giant Antofagasta (LON:ANTO) , which dropped 4.7% to stand at 791.5p.
3.30pm... London remains in red
London remained in the red as US markets opened sharply lower following the setback US President Donald Trump’s healthcare plans.
FTSE 100 was 64 points lower at 7,272 as the Dow Jones Industrial Average shed over 120 points.
Most of the FTSE 100 was in red numbers, thugh a few more were making gains towards the end of the day behind Next and Marks & Spencer, the day’s best performers with gains on 2.4% and 1.6%.
Worst performers were base metal miners Glencore (LON:GLEN) and Antofagasta (LON:ANTO) on fears that Trump’s reverse might hamper his plans for huge US infrastructure spending.
BHP BiIliton and Rio Tinto were also under the cosh as was Babcock (LON:BAB), which along with its partner, has walked away from the contract to decommission Britain’s ageing nuclear power stations.
Its shares fell 4% to 878p.
11.15am...FTSE 100 struggles as US markets tipped for heavy falls
London’s blue chips hunkered down ahead of the US open as they waited to see how Wall Street would react to Donald Trump’s first congressional setback as President.
Early indications were not encouraging. Spread bet firms indicated a decline of about 120 points for the Dow Jones Industrial Average.
That affected the mood in London, with FTSE 100 down 50 points at 7,286 with other European markets also in the doldrums.
Europe has its own concerns with Wednesday’s triggering of Article 50 to spark the beginning of the UK’s departure from the EU another bearish feature.
Labour has unveiled six tests it said have to be passed before it will give its support, some of which were deemed stringent and some not so.
Most of the FTSE 100 was in red numbers.
Worst performer was British Airways' owner IAG (LON:IAG) after Bank of America Merrill Lynch double-downgraded its rating for the FTSE 100-listed firm.
The US broker cut its rating for IAG to 'underperform' from 'buy' and reduced its price target to 500p from 550p.
By mid-morning, IAG shares were down 19p to 530p.
IAG's North Atlantic performance could stall in the second quarter and second half of this year due to a number of fundamentals factors and deteriorating sector sentiment, said the broker.
Among the few risers, precious metal specialists Randgold Resources (LON:RRS) and Fresnillo (LON:FRES) both rose while Next Plc continued to rally as investors overlooked the dip in profits last week to focus on the fundamentals of the high street and online clothes chain.
Shares rose 1.4% to 4,188p, while Marks & Spencer PLC (LON:MKS), its main rival, added 1% to 335p.
Elsewhere, there was lots of small cap news from the North Sea.
The growing likelihood that Hurricane Energy’s (LON:HUR) latest well, Halifax, is potentially a multi-billion barrel development added another 6% to the shares today at 57.6p.
Jersey Oil & Gas PLC (LON:JOG), meanwhile, climbed 11% to 257.9p on a bullish upgrade to its Verbier well. also in the North Sea.
Debt laden Premier Oil PLC (LON:PREM) was the exception as it eased 3% to 61.3p on the award of a floating platform contract to Wood Group PLC (LON:WG.).
Lab test specialist Exova Group PLC (LON:EXO) has received bid proposals from three potential suitors: Element Materials Technology, Jacobs Holding and PAI Partners
The possible offers are in cash and dependent on completion of due diligence and the recommendation of the board. Shares in the Edinburgh-based group rose 14% to 250p.
Falcon Acquisitions Limited (LON:FAL), now called Falcon Media, made a strong start to trading on AIM where it returned from suspension today following the reverse acquisition of video streaming company Orbital Media.
As a result, the company now owns Q-Flow technology that prevents the frequent loss of signal or 'buffering', a current curse of the video streaming market.
A placing at 25p has raised £4mln and reflecting that hefty premium the shares were trading at 19.5p, up 36%, in early deals.
8.45am...FTSE 100 hit by Trump Dump and Brexit
The Trump Dump, which has affected markets now for three days, continued into the new week with investors also enduring a bout of the jitters ahead of the triggering of Article 50 to start the Brexit process.
It led to a 61-point fall in the FTSE 100 to 7,275.41 – which judged by the recent movements of the blue-chip index adds up to a significant movement.
Early on there were only nine risers on the Footsie, led by precious metals stocks Randgold Resources (LON:RRS) and Fresnillo (LON:FRES).
On the debit side, the mainstream miners received a biffing as did the financial stocks.
The fall in the dollar combined with the continued weakness of the pound (which could fall again later this week when the Brexit clock starts ticking) left shares in British Airways International Consolidated Airlines (LON:IAG) grounded. Down 3% early on, IAG topped the list of losers hit too by a reported downgrade in rating from BofA Merrill Lynch.
Gushing higher was Hurricane Energy (LON:HUR) after the completion of its latest well, Halifax.
The upshot is Hurricane is probably sitting on a multi-billion barrel well. The share price advanced 8% early on and has shot up almost 400% in the last year, valuing the business at more than £700mln.
For chief executive Robert Trice it is vindication of his theory that there is a thick and rich oil horizon below that commonly drilled by the big North Sea players.
Proactive news headlines
European Wealth Group Limited (LON:EWG), the integrated wealth management group, has entered in to a £720,000 12-month loan facility that carries an interest rate of 10%. Big Pic is from July 2015.
ITM Power plc (LON:ITM), the energy storage and clean fuel company, has sold a 0.5 megawatt electrolyser and some associated hydrogen energy equipment for £730,000.
Genedrive PLC (LON:GDR) is nearing a landmark for its breakthrough rapid diagnostic for Hepatitis-C with the AIM-listed group ready to submit its breakthrough for regulatory approval.The receipt of CE IVD certification under the EU Medical Devices Directive would green-light the commercialisation of the product in the European Union.
Premier African Minerals Limited (LON:PREM) has raised £2 mln through an underwritten offer that was made exclusively available through PrimaryBid.com.
Having recently raised funds Obtala Limited (LON:OBT) said in its first quarter trading update it is now focused on delivering the infrastructure required to underpin the generation of strong positive cash flow.
Shares in Advanced Oncotherapy PLC (LON:AVO) opened higher on Monday after the proton therapy specialist secured another £3mln in financing, which it expects to draw down shortly.
DP Poland Plc’s (LON:DPP) rapid growth in the eastern European country accelerated again last year, with total sales rising more than 60% in 2016.
6.45am...rocky start predicted
The FTSE 100 looks set to get off to a rocky start thanks to a hangover from Trump’s healthcare reforms and ahead of the most important week politically and economically in a generation.
The index of blue-chip shares is set to tumble 46 points at the opening to 7,290.83 following the embarrassing backtrack by the US president and his team Friday.
The change in sentiment also stymied Asia’s main markets.
“This failure would seem to suggest that investor optimism is likely to be misplaced if they think that it will be easier for President Trump to shift gears and focus on tax reform and fare any better than he has on health care reform,” said Michael Hewson, analyst at CMC Markets.
“If anything it will be much harder given that the consensus on this is probably likely to be much more difficult to achieve than on health care, which suggests that a lot of the optimism about the reflation and fiscal stimulus trade may well have to be reassessed as well.”
Back here in the UK the headlines are likely to be dominated by Brexit once more ahead of and in the aftermath of the Wednesday’s triggering of Article 50.
This will begin two years of negotiation ahead of the UK’s departure from the European Union.
The week appears to be a busy one for corporate news. One wonders why the travel TUI AG (LON:TUI) firm has chosen Brexit Day to provide us with an update, though one suspects the TUI team booked it well in advance of Theresa May.
Rival Thomas Cook (LON:TCG) reports on Tuesday, while we’ll see whether the recovery at Tesco (LON:TSCO) is still on rails on Thursday.
Not normally worthy of mention, third-tier broker Panmure Gordon has its full-year results on Tuesday. It’s probably too early to learn about new broom Bob Diamond’s plans for the business after his agreed bid a week-and-a-half ago. However there will be an unusually high level of interest in the company one suspects.
- Brent crude US$50.59 a barrel, down 21 cents.
- Gold US$1,259.50 an ounce, up US$7.80.
- Pound worth US$1.2530.
Main Business Headlines
- Brussels is set to deliver its verdicts on two big corporates deals this week with authorities expected to bless the US$140bn union of US agrichemical giants Dupont and Dow Chemical while formally vetoing the €29bn merger of the London Stock Exchange Group and Deutsche Börse – FT.
- Two of Britain’s leading banks have drawn criticism from some big shareholders over decisions to lower the hurdles for long-term bonuses for their bosses, in the latest example of UK companies coming into conflict with their investors over executive pay – FT.
- Old Mutual plans to sell a near-25% stake in its U.S. asset management division to a Chinese firm HNA Capital for US$446 million, as part of the financial services group’s strategy to break itself up – Times.
- UBS is poised to land the lead role in advising the owners of Shop Direct on a possible sale or stock market listing of the retailer behind the Very and Littlewoods brands – Times.
- Credit strategists are increasingly disturbed by a sudden and rare contraction of U.S. bank lending, fearing a synchronised slowdown in the U.S. and China this year that could catch euphoric markets badly off guard – Telegraph.
- Snapchat could become more popular with advertisers than Twitter, Yahoo and AOL within three years, with the messaging app company forecast to bring in revenues of more than US$3bn a year before the end of 2019 - Guardian.